JPMorgan: Kioxia Reports Record Q1 Profit, ¥800 Billion Buyback Boosts Stock Price

JPMorgan released a report stating that Japanese storage company Kioxia achieved record performance in the first quarter, with sales reaching ¥1.7671 trillion, a year-on-year increase of 415% and a quarter-on-quarter increase of 76%. Non-GAAP operating profit reached ¥1.3262 trillion, a year-on-year increase of 2833% and a quarter-on-quarter increase of 121%, with the operating profit margin rising to 75%.

Kioxia's Q1 performance was primarily driven by price increases, with the average selling price (ASP) rising approximately 70% quarter-on-quarter, while bit shipments experienced low single-digit growth quarter-on-quarter. Sales from SSD and storage businesses reached ¥1.1747 trillion, a year-on-year increase of 440% and a quarter-on-quarter increase of 96%, accounting for 66% of total revenue; among which, data center and enterprise-level businesses contributed over 60% of the segment's revenue.

Looking ahead to Q2, Kioxia guides revenue to be ¥2.39 trillion, with Non-GAAP operating profit projected at ¥1.9 trillion and an expected operating profit margin of 79.5%. The company anticipates a 35% quarter-on-quarter revenue growth in Q2, continuing to be driven by ASP increases, while demand from data centers and enterprise-level sectors remains strong.

JPMorgan believes that the upward trend in Kioxia's enterprise-level SSD sales is still a more important observation point. The company also announced a share buyback of up to ¥800 billion, which is expected to support stock price sentiment. JPMorgan maintains a "Overweight" rating on Kioxia, with a target price of ¥155,000.

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